ch18lec - ECON 306 Chapter 18 Technology RUST CHO DIAZ...

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Unformatted text preview: ECON 306 Chapter 18: Technology RUST, CHO, DIAZ Inputs and Outputs x Inputs – factors of production. x General classification of inputs: labor, land, raw materials, and capital. x Usually try to measure in flows units – a certain amount of labor per week and a certain number of machine hours per week will produce a certain amount of output per week. x Types of capital: physical capital (machines), financial capital (money). Technological Constraints x Only certain combinations of inputs are feasible ways to produce a given amount of output. The firm must limit itself to technologically feasible production plans. x Production set – combinations of inputs and outputs that are feasible patterns of production ) , ( 2 1 x x f y d . See Figure 18.1. x Production function – upper boundary of production set ) , ( 2 1 x x f y . x Isoquants – all combinations of inputs that produce a constant level of output. x Isoquants (constant output) are just like indifference curves (constant utility). 18.0118....
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ch18lec - ECON 306 Chapter 18 Technology RUST CHO DIAZ...

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